The Costa Rica Electricity Institute Lost Its Monopoly Rights with Approval of CAFTA Law.
After months of protests, parades, and arguments that could end friendships, Costa Rica voted in favor of approving TLC, the Tratado de Libre Comercio, known in English as CAFTA, the Central America Free Trade Agreement. Since then, the Legislature has debated the laws necessary to fully enact the TLC. Among the several points of contention were ICE and RACSA (the Costa Rican Electricity Institute, and Costa Rican Radio-Graphics, Inc.), which until now have had a monopoly over all Costa Rican telecommunications.
Yesterday afternoon, the Asamblea Legislativa (Legislative Assembly) formally approved the opening of the Costa Rican telecommunications market. Though expected, this is still a very meaningful political act, and will forever be remembered as the day that Costa Rica’s communications future was officially changed.
This law was an integral — and required — part of the ratification of CAFTA, and 49 legislators were present for the historic vote. Of the legislators present, 35 voted in favor of opening telecommunications, and 14 voted against the motion. In accordance with the Political Constitution, the law will need Executive Power (presidential) approval and publication in La Gaceta to be fully converted into law, though there is no doubt that this will happen soon.
The new Ley General de Telecomunicaciones allows for other companies to establish cellular phone and internet service within Costa Rica, and a sub-law requires the formation of a Telecommunications Supervision Board. The board will integrate into Aresep (the Public Services Regulatory Authority), and will regulate telecommunications competition.
Among the new requirements, the Supervision Board will determine what services may be offered, as well as the rates for those services. In addition, it will be responsible for creating and maintaining a National Telecommunications Fund, which will ensure rural telecommunications coverage by subsidizing installations in areas less attractive to the country’s arriving investors.
A main concern for many who opposed CAFTA was whether ICE could compete in an open market, since it has often operated at very little profit, and has only been able to keep rates low thanks to government subsidies. Their worry was that, when ICE’s customers began to abandon ship for greener pastures, the company’s profits would be too low to continue operations.
To combat this real fear, legislators are preparing to debate the Ley de Fortalecimiento del ICE (the ICE Strengthening Law), which will help ICE and give it the tools and government aid it needs to remain strong in this new, open market. The hope is that one day soon, ICE will compete fairly with new, private telecommunications companies that open their doors in Costa Rica.
Rodrigo Arias, the Minister to the Presidency, noted that, in typical tico style, though there was much debate and contention over the ratification of TLC, this new law was passed without violence. So into the future the country marches, peaceful and hopeful that CAFTA will benefit the nation, beginning with its telecommunications market.
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|Written by Erin Raub|
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Filed under: Business on May 15th, 2008